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DEPARTMENT OF ENERGY PPC MINISTERIAL BRIEFING ON THE OUTCOMES OF THE SERVICE DELIVERY AGREEMENT Ms Dipuo Peters, MP Minister of Energy 09 October 2012
DEPARTMENT OF ENERGY
PPC MINISTERIAL BRIEFING ON THE OUTCOMES OF THE SERVICE DELIVERY
AGREEMENT
Ms Dipuo Peters, MPMinister of Energy
09 October 2012
PRESENTATION LAYOUT•Introduction •Key focus areas for 2011/12
• Hydrocarbons• Electricity and electrification• Nuclear• Clean Energy, Climate Change and energy efficiency• International relations (including the Africa Continent)
•Government Outcomes and related programmes • In April 2010 – signed a Performance Agreement on government outcomes 6 and 10.• Subsequently an additional five service delivery agreements were co-signed•DOE has a supporting responsibility in all these outcomes.
•Conclusion
2011/12 Key focus areas
•HydrocarbonsSecurity of supply of petroleum products• Improve national refining infrastructure and capacity.• Up-grade the supply network.
•Electricity and electrification• Development of the Integrated Resource Plan (IRP).• Security of supply through revamping and maintenance of
electricity infrastructure (generation, distribution and reticulation).
2011/12 Key focus areas (cont)
•Electricity and electrification (cont)•Refine INEP to eradicate the electrification backlog. •Provision of a framework for IPP participation.•Implementation of the IRP.•Establishment of the Independent Systems Market Operator (ISMO).
•Nuclear•Pursue nuclear energy in line with the IRP.•Implement nuclear decisions – e.g establishment of the NNEECC,•Establishment of the National Radioactive Waste Disposal Institute.•Education and awareness on nuclear matters.
2011/12 Key focus areas (cont)
•Clean Energy, Climate Change and Energy Efficiency•Promote the development and usage of clean and renewable energy and improve our efforts to meet our energy efficiency and renewable targets. •Implementation of the Solar Water Heaters programme to meet the 1 million systems’ target by 2014.•Implementation of energy efficiency programmes for the industrial and domestic sectors in line with the IRP for the achievement of the 2015 national target of 12%.•Implementation of the demand side management initiatives – e.g Carbon Capture and Storage, etc•Co-hosting of COP 17.
2011/12 Key focus areas (cont)
•International Relations•Provision of an enabling environment to pursue regional development and Africa advancement and enhance international co-operation:
•Signing of the Grand Inga MOU.•Signing of agreements and declaration of intent, covering areas of cooperation in capacity building, funding, technology and infrastructure development .
Government Outcomes and related programmes
SIGNED PERFORMANCE AGREEMENT
(OUTCOMES 6 and 10)
GOVERNMENT OUTCOMES
OUTCOME 6:AN EFFICIENT, COMPETITIVE & RESPONSIVE ECONOMIC
INFRASTRUCTURE NETWORKOutput 1: Improving competition and regulation:•Establishment of the ISMO – The Bill was introduced in Parliament after stakeholder consultation at NEDLAC. A due diligence process has been initiated to investigate the possible transfer of transmission assets into ISMO. It is anticipated that the legislation will be finalised by the first quarter of 2013, where after the state-owned company will become operational.•Building of the NMPP between Durban and Johannesburg to ensure a reliable and sustainable supply of liquid fuels. This year will be making the last transfer of R1,5bn to Transnet. The pipeline was operationalised in December 2011
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GOVERNMENT OUTCOMESOUTCOME 6 (cont):
AN EFFICIENT, COMPETITIVE & RESPONSIVE ECONOMIC INFRASTRUCTURE NETWORK
Output 2: Ensure reliable generation, distribution & transmission of energy:Generation:
• Introduction of IPPs – The Renewable Energy IPP procurement process is underway to facilitate IPPs that will generate power side by side with Eskom. Approximately 2400MW of renewable energy IPPs have been selected as preferred bidders for the generation of power using wind, solar and small-hydro technologies starting in 2012.
• Electricity generation/build programme – (Completion of OCGT IPP – 100MW) Contract negotiations have been completed and reached commercial close. Awaiting signature of proven power purchase agreement once conditions precedent (including government guarantees) imposed by Eskom are fulfilled.
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GOVERNMENT OUTCOMES
OUTCOME 6 (cont):AN EFFICIENT, COMPETITIVE & RESPONSIVE ECONOMIC
INFRASTRUCTURE NETWORKDistribution & Transmission:•Develop a funding and implementation plan and reduce the distribution infrastructure maintenance backlog of 27.4 Billion to R 15 billion by 2014:
o Funding and implementation Plan was in place by March 2012(MYD 3).
•Restructuring of the Electricity Distribution Industry: o The Approach to the Distribution Asset Management (ADAM)
proposal has been completed.
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GOVERNMENT OUTCOMES
OUTCOME 6 (cont):AN EFFICIENT, COMPETITIVE & RESPONSIVE ECONOMIC
INFRASTRUCTURE NETWORKOutput 2: Ensure reliable generation, distribution & transmission of energy:Distribution and Transmission:•Address the backlog challenges in the maintenance of the electricity distribution infrastructure;•Development of Substations; •Household access to electricity to be 92% by 2014 – ( Details in slide no 3.2)
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GOVERNMENT OUTCOMESOUTCOME 10:
Environmental assets and natural resources that are well protected and continually enhanced
Development & implementation of policies to reduce greenhouse gas emissions & climate change impacts, & improve air/atmospheric quality.
Output 2: Reduce greenhouse gas emissions, enhance measures to adapt to climate change impacts and improved air quality•2.3 Renewable energy deployment ( refer to RE: IPP process slide 17 )
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GOVERNMENT OUTCOMESOUTCOME 10 (cont):
Environmental assets and natural resources that are well protected and continually enhanced
Sub -output 2.5: Efficient energy use:•2.5.1Energy efficiency improvement of 12% by 2015
• Completed the Second review of the National Energy Efficiency Strategy (Consultation with Residential and Commercial Building sector, Mining and Industrial Sector, Business Unity South Africa and National Business Initiative and sector workshops held during the course of 2011 (i.e. etc)
• The Energy Efficiency Campaign was consulted upon extensively and was launched during COP 17.
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Additional outcomes co-signed by the Minister of Energy
Outcomes 2,4,7,8 and 9
GOVERNMENT OUTCOMESOUTCOME 2 (cont):
A LONG AND HEALTHY LIFE FOR ALL SOUTH AFRICANS
• INEP - Electrification of clinics & health centreso The electrification backlog in 2009/10 was completed.o Electrification of all new clinics & health centres from
2010/11 onwards are addressed by the National Department of Health.
• Conversion from non-grid to grid will be done by the Department
• Solar Water Heaters ( Addressed in Outcome 4)
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GOVERNMENT OUTCOMESOUTCOME 4:
DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH
Energy security project implementation & local industrialisation of the main value chains to sustain economic growth and job creation.
•Introduction of renewable energy under the RE:IPP procurement programme:
• 1st and 2nd windows under the IPP programme have been concluded. 28 and 19 selected projects under window 1 and 2, respectively.
• Financial close for window 1 is expected to be achieved soon.• Construction to commence after the financial close.• Total capacity procured under the bidding rounds stands at
1050MW for solar, 1197MW for wind and 200MW for CSP.
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GOVERNMENT OUTCOMESOUTCOME 4 (cont)
DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH
• RE:IPP procurement programme (cont):• Expected job creation – 14 000 construction, 415 permanent
under the solar programme, 3400 construction and 193 permanent under the wind programme, 1827 construction and 120 permanent under the CSP.
• Challenges – delays with the financial close.
• Solar Water Heaters:• Over 270 000 systems installed to date under the rebate
programme.• R4.7bn over the MTEF has been secured with National
Treasury to ensure the 1million target is reached by 2012.
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GOVERNMENT OUTCOMESOUTCOME 4 (cont)
DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH
• Solar Water Heaters (cont):• The designation under the PPPFA for local content is being
developed.• A centralised procurement system based on approved
suppliers will be phased in to increase the attractiveness of local manufacturing.
• A new contracting model has been agreed with Eskom to be based on the plate technology standard that will be locally manufactured.
• The Eskom rebate programme to be replaced by the new contracting model.
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GOVERNMENT OUTCOMESOUTCOME 4 (cont)
DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH
• Solar Park • Engagement started with the Siyathemba Municipality;• An MoU between DoE, CEF and Siyathemba Municipality
signed off in September 2012; and• Siyathemba Municipality already took a council resolution to
allocation 5000 hectors for a Solar Park.
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GOVERNMENT OUTCOMESOUTCOME 7:
VIBRANT, EQUITABLE & SUSTAINABLE RURAL COMMUNITIES WITH FOOD SECURITY FOR ALL
Electrification of rural households & building of bulk infrastructure through INEP concentrating on 23 district municipalities that have been identified by the Department of Rural Development & Land Reform (DRDLR) as the areas in the country that have the most deprived municipalities .Identified District Municipalities: •Limpopo = 4•Mpumalanga =1•Kwa-Zulu Natal =9•Eastern Cape =5•Free State =1•Northern Cape =1•North West =2
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GOVERNMENT OUTCOMESOUTCOME 7 (cont):
VIBRANT, EQUITABLE & SUSTAINABLE RURAL COMMUNITIES WITH FOOD SECURITY FOR ALL
Bulk SubstationsAccess to energy •Increase % of households linked to grid as capacity building for Municipalities from 55% to 70% •Integrated Energy Centers
o Seven IeCs are already operational o Five IeCs are in the pipeline for the 2012/13 financial year( EC -
2,KZN ,FS, Limpopo•Setting cost reflective tariffs while cushioning the poor from increasing electricity costs
o Five year phase in of cost reflective tariffs up to 2015 , including measures to protect the poor is in place.
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GOVERNMENT OUTCOMESOUTCOME 7 (cont):
VIBRANT, EQUITABLE & SUSTAINABLE RURAL COMMUNITIES WITH FOOD SECURITY FOR ALL
• Development of LPG retail price regulation to accelerate the penetration of LPG in the household marketo LPG retail price regulation is in place
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GOVERNMENT OUTCOMESOUTCOME 8:
SUSTAINABLE HUMANSETTLEMENT & IMPROVED QUALITY OF
HOUSEHOLD LIFE
•Contribute to support households & business via the Electrification Programme & the job opportunities presented by the Electrification Programme, the Integrated Energy Centres (IECs), the installation & maintenance of solar systems & SWH.
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GOVERNMENT OUTCOMESOUTCOME 9:
A RESPONSIVE,ACCOUNTABLE, EFFECTIVE & EFFICIENT LOCAL
GOVERNMENT SYSTEM• Electrification of households through INEP & increased service delivery
by all municipalities.• R 2.8 billion was received for INEP Budget Allocation for 2011/12.
o Eskom received R 1.74 billion.o R 1.10 billion was allocated to the municipalities.
• Budgeted connections for 2011/12 were 198,882.o Municipality R 99,505 and Eskom R 99,377.
• INEP Budget Allocation for 2012/13 R 3,03 billion.• Electrification of households in rural areas with off-grid
technology- 10 00 planed connections per annum.
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Thank you
